Market data showed that by the close on September 11, light crude for October delivery on the New York Mercantile Exchange rose $6.43 to settle at $102.48 per barrel, a gain of 6.69%. Meanwhile, Brent crude for November delivery on the London exchange climbed $6.42 to close at $107.63 per barrel, up 6.34%. The main SC crude contract on the Shanghai International Energy Exchange settled 6.19% higher at 816 yuan per barrel by the 2:30 AM close on September 11.
According to trading sources, the shortage of available tankers combined with threats from Houthi militants has made Saudi Aramco's Red Sea refinery a key export hub. Russell Hardy, CEO of Vitol Group, along with several traders at a Singapore conference this week, noted that refined product exports through the Strait of Hormuz are slowly recovering, but the pace remains insufficient to prevent surging fuel prices that are squeezing global consumers. At least 1 million barrels of refined products currently transit this disputed waterway daily, a figure matching data from tanker tracker Vortexa, though pre-conflict volumes were approximately 4 million barrels per day excluding LPG. Traders at the Singapore meeting indicated that the slower recovery in fuel transport stems partly from difficulties in securing tankers for loading. Despite attack risks, some vessel owners remain willing to ship crude through Hormuz because soaring VLCC freight rates make voyages profitable. However, refined products typically move on smaller vessels requiring more voyages, which carry greater risk.
The Trump administration is pushing for significant investment in Venezuela's oil sector, with traditional companies remaining cautious while outsiders seize opportunities. Reports indicate that Fred Ehrsam, billionaire co-founder of Coinbase, spent months at a luxury hotel in Caracas building connections to pursue an ambitious plan to become one of Venezuela's largest oil producers. Despite having no prior oil and gas industry background, the 38-year-old entrepreneur has unexpectedly emerged as a contender in Trump's push to revitalize Venezuela's petroleum sector. Primavera, a company Ehrsam co-founded earlier this year, signed a production-sharing contract with Venezuela's state-owned oil giant PDVSA, establishing a foothold in the country. Trump has urged companies including ExxonMobil, ConocoPhillips, and Harold Hamm's Continental Resources to invest $100 billion to rejuvenate Venezuelan oil fields. However, with the U.S. having captured Venezuelan President Maduro eight months ago, these companies remain on the sidelines for now, while Primavera stands among the few American firms already engaged.
The Trump-backed Venezuelan oil driller North American Blue Energy Partners (NABEP) plans to more than double crude output within just over two years. NABEP aims to increase daily production from approximately 200,000 barrels to 500,000 barrels by the end of 2028. The company stated that supply growth has been funded through internal cash flow thus far, with any external investment expected to accelerate expansion. NABEP gained prominence in recent weeks after the Trump administration signed what it describes as the largest oil deal in world history. Under the agreement, NABEP secured 100-year concessions on 17 oil fields with an estimated 65 billion barrels of proven reserves. The company noted that the agreement with the U.S. government merely accelerated its existing growth trajectory.
OPEC has cut its oil demand growth forecast for the fifth consecutive time. The cartel's monthly report lowered the 2026 global oil demand growth projection to 380,000 barrels per day, marking the fifth straight reduction. However, the producer group maintains that consumption impacts since the Iran war have been less severe than projections from other forecasting agencies like the International Energy Agency, which expects demand to decline in 2026. The report also shows OPEC raising its 2027 demand growth forecast to 2.36 million barrels per day, up from a previous projection of 2.16 million. The 2026 forecast now stands at 380,000 barrels per day, down from the earlier estimate of 580,000 barrels.
The Bab el-Mandeb Strait represents one of the most critical maritime routes for global commodities and cargo shipping, particularly for Asia-to-Europe routes via the Suez Canal. The strait is equally vital for the Sumed pipeline transport along Egypt's Red Sea coast and serves as an important passage for goods moving to Asia, including Russian oil. Any disruption to shipping through the Bab el-Mandeb would force vessels to reroute around Africa's Cape of Good Hope, adding weeks to what would otherwise be relatively direct journeys while significantly driving up transportation costs.
The current oil price rally differs from the March-April period in that Iranian crude exports have also declined substantially, while Russian ESPO crude has been diverted toward major refineries and large-scale integrated operations. This has essentially eliminated the low-cost sanctioned crude supply source for independent refiners, forcing them to procure compliant feedstock. The recent combination of elevated oil prices, high premiums, and soaring freight costs is compressing refining margins across China and the broader Asia-Pacific region, with feedstock price increases far outpacing gains in Singapore refined product prices. This dynamic will likely prompt Asia-Pacific refiners to reduce operating rates, creating negative feedback on prices. While geopolitical factors continue to push oil higher, a reversal is already starting to brew.
Geopolitical tensions and market sentiment may drive short-term price increases, but demand-side negative feedback cannot sustain elevated prices. The strategy suggests considering short positions at higher levels while purchasing call options as downside protection.
Downside risks include a de-escalation of Middle East conflicts, reopening of straits, and a global economic crisis. Upside risks include China demand recovery exceeding expectations and further deterioration of Red Sea and Middle East situations.